The European Commission plans to crack down on EU members whose government’s hand out so-called “golden visas” to wealthy third-party nationals, many of whom are from former Soviet republics, including Russia, Ukraine, Azerbaijan, and Kazakhstan.
Justice Commissioner Vera Jourova pointed out that particular rules exist for investor residence permits in 20 EU countries, but certain grey areas in the laws are often exploited by the bloc’s individual governments
The Commission published a report urging the 28 members of the EU to curb the practice of giving foreigners, which also include Chinese citizens and passport holders from the Arab Gulf States, residency or citizenship in return for large-scale investments.
According to Jourova, investor residence and citizenship schemes should not be a weak link in the EU’s efforts to curb corruption and money laundering, which has become an area of concern in recent months after a scandal involving Deutsche Bank offshoot, Danske Bank, which saw the latter handle billions of euros worth of illicit money transfers involving non-EU residents. She also acknowledged that the golden passport scheme is usually carried out due to the fact that the bloc’s system for doing background checks, including the Schengen Information System, is not being used efficiently.
Jourova stressed that the European Union must carry out proper due diligence to ensure that the rules on combatting money laundering and tax evasion are not circumvented.
The EU executive’s report also said that both the public and private sectors lack clear information as to how the golden visa schemes are run, including details about the number of applications received, granted or rejected and the national origins of the applicants. This, according to Jourova, is further compounded as the bloc’s members do not exchange information about investors who apply for residency, nor do they inform each other about individuals who have been rejected.
EU regulations allow a third-party national that holds a European residence permit the right to reside in a European Union country and also grants free access to the countries of the Schengen Zone.
The current status is complicated, however, by the fact that EU laws regulate the entry conditions for certain categories of third-country nationals, but that the 28 national governments that make up the bloc are legally able to grant investor residence permits under their own laws, which lack EU regulation coverage.
At present, 20 countries are known to run golden visa schemes, including Bulgaria, the Czech Republic, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, and the United Kingdom.
One major area of concern for the Commission is the overall lack of transparency in the application process of certain governments for what has become known as a “golden passport”.
A handful of EU countries such as Cyprus and Malta have, thus far, not required an investor to be physically present in the country, though they have allowed those individuals to remain eligible for Europe’s long-term residence status, which eventually provides an opening to be fast-tracked to EU citizenship.
The Commission says it will monitor the steps taken by the EU-28 as they move to crack down on the golden visa scheme, adding that the immigration services of each EU member need to develop a common set of security checks for investor citizenship schemes, including specific risk management processes, by the end of 2019.